Fast-forwarding the WTO's dispute settlement process

The World Trade Organization (WTO) was established in 1995 to provide for the orderly settlement of disputes arising in international trade. In its twenty-two years of existence, the WTO has dealt with almost 500 separate trade disputes, all ultimately settled voluntarily by members participating in the organization.

A broad review is underway to determine how participants might improve the existing process. And there is no shortage of suggestions.

If participating businessmen were asked for their views of the present process, it is virtually certain two criticisms would dominate their answers:

1). The process is slow.2). The ultimate finding is only applicable from the decision date forward. In other words, all prior economic damage is essentially forgiven.

If the final judgment were revised so the determination reached back to measure damages from the date the case was filed, the first criticism

would be self-correcting since such a fix would create a substantial incentive to settle promptly and minimize the total damage claim.

It is important to recognize, however, that this organization is totally voluntary and a change of such a magnitude would be difficult to achieve. The WTO currently has 164 members of which 117 are developing countries or separate customs territories.

A rules-based trading system is vital to the health of international trade. And although the WTO has made an important contribution to orderly trade, there is certainly room to improve its processes and procedures.

Revising the WTOs ground rules is where the battle should be fought, as opposed to ideologues shouting Free Trade and Protectionism at each other.

The Dispute Settlement System is essentially designed to aid in conciliation or settlement short of a final judgment. It has accomplished this objective. And it may be that the lengthy periods provided for in the process toward an ultimate arbitration are a necessary characteristic of the desired settlement process.

If so, raising the stakes by measuring damage from the date of the first filing rather than from the date of settlement should incentivize the process.

Thomas C. Graham

Thomas C. Graham is a founding member of T.C. Graham Associates. He is a former chairman and chief executive officer of AK Steel Corp., president and chief executive officer of Armco Steel Co. LP, chairman and chief executive officer of Washington Steel Co., president of the U.S. Steel Group of USX Corp. and president and chief executive officer of Jones & Laughlin Steel Co. His column appears monthly. He invites readers comments and can be contacted at graham1804@gmail.com.